Garanti BBVA (GARAN), a unit of BBVA (Madrid/BBVA), has obtained a 367-day syndicated loan in tranches of $199mn and €219mn, the lender said on June 2.

A total of 26 banks from 13 different countries participated in the facility.

The loan is to be used to finance international trade activities while the sustainability criteria include commitments to provide loans to women-led and micro-scale companies in Turkey’s earthquake-hit region.

Costs were in line with the benchmarks set by Akbank (AKBNK), the big-cap unit of Turkish conglomerate Sabanci Holding (SAHOL).

The cost of the USD-tranche stood at the guaranteed overnight financing rate (SOFR) plus 425bp while the cost of the EUR-tranche was the euro interbank offered rate (Euribor) plus 400bp.

The renewal rate stood at 73%, while spreads remained at record high levels.

Story chart: Turkish companies’ external debt rollover rates.

In May 2022, Garanti obtained a 367-day syndicated loan in tranches of $284mn and €291mn at SOFR+2.75% and Euribor+2.10%. The rollover rate stood at 100%.

The bank has another syndicated facility. In November 2022, it obtained a 367-day syndicated loan in tranches of $155mn and €239mn. The rollover rate stood at 61%. The costs stood at SOFR+4.25% and Euribor+4.00%.

Chart: Garanti’s funding composition at end-March.

In line with local peers, Garanti, the fifth largest bank in Turkey with Turkish lira (TRY) 1.3 trillion ($63bn) worth of total assets at end-March, has a B-/Negative (one notch below Turkey’s sovereign rating and six notches below investment grade) from Fitch Ratings and a B3/Stable (six notches below investment grade in line with Turkey’s sovereign rating) from Moody’s Investors Service.

Turkish banks conduct 367-day—a ‘trick’ maturity for registering loans as long-term that uses two extra days—syndicated loan renewal seasons twice a year, with one season in spring (April-July) and the other in autumn (October-November).

Turkish banks release identical costs in syndicated loan renewals while some of the lenders, particularly smaller ones, pay higher fees.

Across recent years, Akbank has set the Turkey benchmark for the interest rates each season. In April 2022 and 2023, Ziraat Bank launched the spring seasons. However, Ziraat could not provide the costs this year. It awaited Akbank’s released costs to provide its costs.

In the autumn refinancing season of 2022, nine Turkish banks renewed an exchange rate-adjusted combined sum of $5.6bn, obtaining $4.3bn worth of fresh loans. The rollover rate stood at 77%.

The private banks’ renewal rates were very low, in the 60-70%s, while the spreads were at record high levels. QNB Finansbank registered the highest rollover rate of 104%. Government-run banks registered 90-100% rates.

The all-in costs were in line with the benchmarks set by Akbank (AKBNK), namely SOFR+4.25% for the USD tranche and Euribor+4.00% for the EUR tranche (see full list below).

In the spring season of 2022, 11 banks renewed $8bn of loans at a combined renewal rate of 92% with borrowing amounting to $7bn in total. The costs of the USD-tranches stood at the guaranteed overnight financing rate (SOFR) plus 275bp. The costs of the EUR-tranche were Euribor+210bp. In spring 2021, the costs stood at Libor + 2.50% and Euribor + 2.25%.

In the spring season of this year, 11 banks are to renew a combined sum of $7bn. And, in the autumn season, nine banks are to roll over a combined sum of $4bn.

The share of syndicated loans in Turkey’s and Turkish banks’ external funding composition has declined in recent years. Turkey rolls over a combined sum of around $150-200bn each year.

Benchmarks remain painfully high as SOFR remains above the 5%-level, compared to the 0.05% seen in October 2021, while 12-month Euribor is testing the 4%-level, compared to the minus 0.5% recorded in October 2021.

In June, SOFR is to replace the current USD-benchmark London Interbank Offered Rate (Libor). One-year Libor currently stands at over 5%.

Recently, all the benchmarks have been on the rise in parallel with the global monetary tightening trend, which is expected to be reversed this year.

		Total	Renewal	Maturity	Tranche	Cost	Tranche	Cost
		(mn)	Rate	(days)	1	1	2	2
Jun-23	Garanti BBVA (GARAN)	$433	73%	367-day	$199	SOFR+4.25%	€219	Euribor+4.00%
Jun-23	Yapi Kredi (YKBNK)	$580	78%	367-day	$202	SOFR+4.25%	€353	Euribor+4.00%
May-23	QNB Finansbank (QNBFB)	$329	102%	367-day	$171	SOFR+4.25%	€144	Euribor+4.00%
May-23	Vakifbank (VAKBN)	$817	81%	367-day	$190	SOFR+4.25%	€576	Euribor+4.00%
May-23	Turk Eximbank	$670	89%	364-day	$54		€522	Chinese yuan 325mn
Apr-23	Akbank (AKBNK)	$500	71%	367-day	$246	SOFR+4.25%	€233	Euribor+4.00%
Apr-23	Ziraat Bank	$1,300	103%	367-day	$432		€779
Nov-22	Garanti BBVA (GARAN)	$401	65%	367-day	$155	SOFR+4.25%	€239	Euribor+4.00%
Nov-22	QNB Finansbank (QNBFB)	$545	104%	367-day	$185	SOFR+4.25%	€253	Euribor+4.00%
Nov-22	Vakifbank (VAKBN)	$560	91%	367-day	$223	SOFR+4.25%	€328	Euribor+4.00%
Nov-22	Isbank (ISCTR)	$535	69%	367-day	$191	SOFR+4.25%	€331	Euribor+4.00%
Nov-22	Turk Eximbank	$588	101%	1-year	€404		€136	Chinese yuan 350mn
Nov-22	Denizbank	$606	78%	367-day	$277	SOFR+4.25%	€330	Euribor+4.00%
Nov-22	Yapi Kredi Bank (YKBNK)	$458	61%	367-day	$210	SOFR+4.25%	€249	Euribor+4.00%
Oct-22	TEB	$262	77%	367-day	$64	SOFR+4.25%	€200	Euribor+4.00%
Oct-22	Akbank (AKBNK)	$403	60%	367-day	$225	SOFR+4.25%	€178	Euribor+4.00%
Jul-22	TSKB (TSKB)	$109	63%	367-day	$18		€90
Jun-22	ING Turkey	€300	100%	367-day		SOFR+2.75%		Euribor+2.10%
Jun-22	Isbank (ISCTR)	$774	88%	367-day	$257	SOFR+2.75%	€483	Euribor+2.10%
Jun-22	Denizbank	$453	120%	367-day	$196	€204	364-day	Chinese yuan 255mn
May-22	Garanti BBVA (GARAN)	$594	100%	367-day	$284	SOFR+2.75%	€291	Euribor+2.10%
May-22	Yapi Kredi (YKBNK)	$811	91%	367-day	$350	SOFR+2.75%	€432	Euribor+2.10%
May-22	Turk Eximbank	$745	104%	1-year	$206		€504
May-22	QNB Finansbank (QNBFB)	$364	118%	367-day	$137	SOFR+2.75%	€212	Euribor+2.10%
May-22	Vakifbank (VAKBN)	$983	101%	367-day	$200	SOFR+2.75%	€739	Euribor+2.10%
Apr-22	Akbank (AKBNK)	$701	108%	367-day	$343	SOFR+2.75%	€329	Euribor+2.10%
Apr-22	Ziraat Bank	$1,240	100%	367-day	$353	SOFR+2.75%	€814	Euribor+2.10%

Table: Full list of Turkish banks’ syndicated loan renewals.